Africa’s largest drugmaker, Aspen Pharmacare Holdings is going to purchase Merck & Co.’s (NYSE:MRK) pharmaceutical manufacturing unit. They also took the option to buy a products unit. The entire deal is worth about $1 billion.
According to Aspen chief executive officer Stephen Saad, “The active pharmaceutical ingredients are hard to source or replicate, and this allows us strong pipelines.” This is a chance for the company to extend its reach in emerging markets, such as Asia and Latin America.
The products business that Aspen is purchasing has 11 branded finished dosage formulas. Aspen stated that these products are for oral contraception, hormone replacement, and other therapeutic treatments.
According to Saad, the deal is going to bring in Aspen profits of $602 million in sales. Based in the Netherlands, the drug unit has a satellite office in the U.S. where Merck is located.
The two companies have a ten-year contract, so Merck will continue buying active pharmaceutical ingredients from Aspen. Thus, this deal may be part of an even stronger relationship between the two companies.
Funding has already been set up for the deal. Saad noted that the money was going to come from new debt facilities in Africa and abroad. Additionally, no equity is going to be used in the deal.